{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Class13

# Class13 - Operations Management Class 1 Class 2 Class 3 and...

This preview shows pages 1–12. Sign up to view the full content.

11 Operations Management Class 1: Introduction to OM and Process Analysis Class 2: Process Analysis Class 3 and 4: Process Analysis Continued Class 5 and 6: Variability in processes Class 7: Forecasting Class 8: Quality Management, JIT, MRP, and ERP Class 9: Project Management Class 10: Midterm Review Class 11: Scheduling Class 12: Inventory Management: EOQ Model Class 13: Inventory Management: Lead Time and Demand Uncertainty

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
6/8/10 Learning Objectives To understand the impact of lead time and demand uncertainty in inventory models 22
6/8/10 Cycle Stocks: Tradeoff between fixed costs and Profile of Inventory Level over Time 33 Quantity on hand Q Receive order Receive order Receive order Demand rate Time

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
6/8/10 EOQ 44 H SD EOQ 2 = D Annual Demand Rate S Order or Setup Cost H Annual Holding Cost
6/8/10 EOQ ATM Example Cash Usage: \$100 per week Fixed cost: \$2/order Interest rate: 5% 55 D \$5200 per year S \$2 i 5% C \$1 H i*C = (0.05)(1)=0.05 .98 44 6 2 = = H SD EOQ What is the “unit” here?

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
6/8/10 EOQ Average Cycle Inventory Average Flow Time Cycle Time (or Reorder Interval) Ordering Frequency Exercise Demand: 12,000 units per year Unit cost: \$500 Fixed cost: \$4,000/order 66 D 12000 per year S \$4000 C \$500 i 20% H i*C = (0.20) (500)=100 489.9 2 = EOQ 979.8 2 = = H SD EOQ year 0.041 ) 2 / ( = D EOQ Little’s Law year 0.082 = D EOQ 12.25 orders/year D EOQ =

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
6/8/10 EOQ with Reorder Point 88 H SD EOQ 2 = Reorder Point: ROP = D Demand Rate LT Lead Time Valid provided LT < Cycle Time D Annual Demand Rate S Order or Setup Cost H Annual Holding Cost LT D
6/8/10 Problem: VGH (1) Vancouver General Hospital consumes 100 boxes of bandages per week. The price of bandages is \$70 per box. The hospital operates 52 weeks per year. The cost of processing an order 99 D 100*52 per year S \$60 C \$70 i 15% H i*C = (0.15) (70)=10.50 244 2 = = H SD EOQ S Q D H Q Q TC + = 2 ) ( 3249 500 2 500 ) 500 ( = + = S D H TC 2459.7 244 2 244 ) 244 ( = + = S D H TC 50 ) 52 / 5 . 0 ( ) 52 * 100 ( = = = LT D ROP

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
6/8/10 Accounting for Pipeline Inventory Pipeline inventory is the inventory 1010 I f the buyer pays for inventory when it is shipped from the seller, then the buyer needs to consider the cost of the pipeline inventory LT D Pipeline I nventory (Little’s Law) Average I nventory Cycle Stock (Q/2) Pipeline Inventory (D ·LT) = +
6/8/10 EOQ Model with Constant Demand 1111 Quantity on hand Q Receive order Receive order Receive order Time LEAD TI ME Plac e Orde r Reord er Point LEAD TI ME Plac e Orde r So far, we assumed

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}